Another hole has been blown in the state's budget. AP reports:

A new court ruling says the Arizona Legislature's raid of nearly $4.7 million from a special fund for injured workers was illegal.

Maricopa County Superior Court Judge Larry Grant says the money to be transferred into the state general fund was private money held in trust by the state, not public property.

More details here.

More of these challenges are in the works.

BTW, here's a recent budget update sent to lawmakers from the Joint Legislative Budget Committee staff:

In April, JLBC Staff published updated budget estimates that placed the FY 2011 budget shortfall at between $368 million and $1.2 billion. We will next update our estimates in July after receiving the FY 2010 year-end revenue numbers. In the meantime, we have developed a slide show presentation on the status of the budget for your information.

The size of the FY 2011 budget shortfall will depend on 3 main factors. At the $1.2 billion high end of the shortfall range, each factor contributes roughly $400 million to the size of the problem:

1) revenue collections. Based on our April estimates, we did

not appear to be on track to meet the enacted March budget forecast, which would have led to a $(400) million shortfall. Since that time, however, revenue collections have improved and we could meet or exceed the forecast for at least FY 2010.

2) the outcome of the November ballot propositions concerning First Things First and Land Conservation Fund transfers. If voters do not approve these transfers, we would lose $469 million of our FY 2011 budget solutions

3) the outcome of the federal extension of the Medicaid match rate. As you know, the original March budget eliminated General Fund support of AHCCCS' Proposition 204 program as of January 2011. The subsequent federal health care legislation, however, requires states to retain their current Medicaid programs or risk losing all Medicaid matching funds. We enacted legislation in the spring that would have paid for the AHCCCS Proposition 204 program from January to June 2011 with $385 million in savings from Congress extending the enhanced federal match rate until June 2011. Approximately 30 states have assumed the extension of the match rate in their FY 2011 budget plans.

Congress has yet to enact this legislation. The U.S. House removed the enhanced match rate extension from recent omnibus legislation due to its cost. The U.S. Senate is now actively considering the legislation.